You may use 3 option for action_by_email but useful option is link to a dynaform. Its very simple.

Step 1: Create a template which you want to show in email.
Step 2: Right click on task where you want action_by email and select properties
Step 3: In properties select last option action_by_email
Step 4: There is drop down choose "Link to a dynaform"
Step 5: Fill the fields like select template, when click on link which form will shown, email and subject etc.

Remember in template where you want to show link don't forget to add @#__ABE__ variable.

Respond to an Approval Request Via Email:
Email approval response works in all languages that Salesforce supports. The response word or phrase is checked using the current user language dictionary. If no matches are found, the response word or phrase is checked in all other language dictionaries.
In the first line of your reply to the email notification, enter one of the supported response words.
Periods and exclamation marks are allowed at the end of the word.
Approval Words Rejection Words
approve reject
approved rejected
yes no
2.Optionally, in the second line of your reply, add comments.
3.Send the email